Methanol Spot Market: Geopolitical Outlook Shifts, Demand Weakens, Spot Prices Soften

I. Today's Spot Prices and Regional Quotes

Today, domestic methanol prices diverged across production areas, consumption regions, and ports, generally showing stability in production areas while facing downward pressure in consumption regions and ports.

Major Production Areas: Mainstream ex-factory quotes to both the southern and northern lines of Inner Mongolia stood at 2,730 RMB/ton; Yulin was quoted at 2,730 RMB/ton; Guanzhong at 2,820 RMB/ton; Shanxi at 2,800 RMB/ton; and Henan at 2,930 RMB/ton. Quotes in inland production areas remained generally stable, with producers still showing a willingness to hold firm on prices.

Major Consumption Areas: Southern and Northern Shandong markets quoted a unified 3,030 RMB/ton; Hebei was quoted at 2,900 RMB/ton. Trading activity in traditional consumption zones like Shandong and Hebei was sluggish, with downstream buyers purchasing strictly according to immediate needs.

Port Markets: Spot quotes were 3,280 RMB/ton in Taicang, 3,340 RMB/ton in Ningbo, and 3,320 RMB/ton in Guangzhou. While port prices remained higher than those in inland production areas, the circulation of goods slowed due to weakened MTO demand, resulting in increased room to price negotiation on actual transactions. II. Supply Side: Divergence Between Domestic and Overseas Capacity; Slow Recovery of Imports

Domestic Supply

Domestic methanol production has entered a period of concentrated maintenance; however, sector profit margins remain attractive, keeping overall operating rates high and ensuring ample regional supply. This week, the volume of orders signed by sampled methanol companies in Northwest China (excluding prolonged contracts) reached 58,500 tons—an increase of 11,500 tons (or 24.47%) from the previous period. Inland producers are moving goods smoothly, with low plant inventories and firm auction prices, reflecting robust overall supply and demand conditions in the interior.

Overseas Supply and Imports

Internationally, five Iranian methanol vegetation—KPC, Bcco, Bushehr, Marjan, and Sabalan—have resumed operations, raising regional average daily output to 25,900 tons and steadily lifting global operating rates. However, low transit efficiency through the Strait of Hormuz has limited the daily number of passing vessels and extended the time required to overseas cargoes to reach port, causing a lag in the recovery of methanol imports. On a monthly basis, Iranian methanol shipments totaled only 120,000 tons in April; imports are projected at 500,000 tons to might and expected to rise to 600,000 tons in June. Despite this increase, volumes remain low, resulting in insufficient import replenishment to ports in East and South China in the short term.

III. Inventory Status: Continued Port De-stocking; Pace Likely to Slow

As of might 20, total methanol inventory at major ports in East and South China stood at 710,000 tons—a significant drop of 80,000 tons from the previous period—placing port stocks at multi-year lows. This decline is driven by two factors: persistently low import volumes (resulting in fewer arrivals) and profitable export opportunities (generating substantial orders that divert supply away from ports).

Based on current market conditions—specifically the shutdown of multiple MTO units at ports to maintenance and a sharp weakening of regional demand—the capacity to consume existing stocks is diminishing. Consequently, the pace of port de-stocking is expected to slow gradually in June, and the price support provided by low inventory levels will likely weaken. Inland factory inventories remain generally low; combined with a healthy volume of new orders, there is currently no pressure from inventory accumulation.

IV. Demand Side: Downstream Weakness Across the Board; "Just-in-Time" Demand Dominates

Today, the downstream methanol market shows clear divergence, with overall demand weakening.

Methanol-to-Olefins (MTO): As a core consumption sector at ports, several MTO units have recently reduced operating rates or shut down entirely. This significant contraction in the primary source of demand development at ports has immediately dragged down trading volumes and acted as a key factor suppressing port prices.

Traditional Downstream: Industries such as formaldehyde and dimethyl ether (DME) have entered their seasonal off-peak periods. Operating rates across these sectors are generally low, leading to reduced methanol procurement.

Emerging Downstream & CTO: Coal-to-Olefins (CTO) companies continue to purchase methanol externally. Demand from emerging downstream sectors remains robust, providing vital support to the inland methanol market and partially offsetting the weakness in traditional downstream sectors.

Overall, speculative stockpiling has largely vanished; purchasing across all downstream categories is driven primarily by immediate operational needs ("just-in-time" demand), resulting in low market trading activity.

V. External ecological stability and Supply Chain Dynamics

This week, the US and Iran resumed talks with the prospect of reaching an agreement in principle, causing international crude oil prices to fall sharply. The geopolitical cost premium to methanol has gradually dissipated, and bearish sentiment in the market has intensified. However, the Strait of Hormuz has not yet fully returned to healthy operations; immediate shipping bottlenecks persist, and the inability of overseas supplies to flood the market rapidly has limited the downside to spot prices.

Regarding exports, domestic methanol remains profitable to export, and sales channels remain open, continuously absorbing domestic surplus supply and acting as a buffer to the overall supply-demand stability. In terms of price transmission, the weakening of crude oil has eroded cost support; however, high inland operating rates, low inventories, and delayed overseas imports have prevented a sharp drop in methanol prices, highlighting a distinct tug-of-war between bullish and bearish forces.

VI. Market Outlook

Based on an analysis of market fundamentals, the domestic methanol market is expected to continue its pattern of weak, range-bound fluctuation in the short term. Short term (intraday to mid-late June): Progress in US-Iran negotiations and the status of shipping through the Strait of Hormuz remain key factors to watch; if passage through the Strait continues to enhance, expectations of increased imports will likely exert further downward pressure on prices. Meanwhile, ongoing maintenance at port-based MTO (Methanol-to-Olefins) vegetation and a lack of recovery in demand limit upward momentum. However, low inventory levels—both at ports and in the hinterland—combined with slow arrival rates to overseas cargoes (despite plant restarts abroad), will likely prevent a sharp price decline.

Medium term: Key areas to monitor include the volume of Iranian methanol arrivals and the restart progress of MTO vegetation. A concentrated influx of imports, coupled with a lack of significant recovery in downstream demand, would shift the market toward oversupply and place further downward pressure on prices; conversely, if shipping recovery falls short of expectations, low inventory levels will continue to provide a price floor.

In terms of trading strategy, the market is currently characterized by a fierce tug-of-war between bulls and bears. A wait-and-see approach is recommended to outright positions, cross-commodity arbitrage, and options trading, while closely tracking US-Iran developments, port inventory levels, and changes in downstream operating rates.